re: Apple up over 10% and $47 since last week....what do we see first $500 or $400

quote:I'm thinking about selling today and buying back at 400$. I bought at aroud 415$

Please tell me why you feel we will even see $400 again?

1.it seems to be gaining momentum 2.It is pretty much one of the cheapest companies around 3.It is gaining traction on the heel of the biggest buyback in american history 4.They pay a solid dividend at 3% 5.$145B in cash sitting in the bank 6. a billionaire just bought $100M stake

ITS CHEAP AT $444!!!!! at $880 it would be trading a cheaper level to coca cola? Are they innovating new products every year?

The sell off was irrational due to lack of new products, what you're seeing now is apple returning to normalcy.....it doesn't look like we'll see $400 again

re: Apple up over 10% and $47 since last week....what do we see first $500 or $400 (Posted on 4/30/13 at 3:06 pm to bbvdd)

I was talking about OAS rather then just credit spread. If you look at the comparable 30-year issues for IBM and MSFT they are trading at 102bps and 104bps of OAS respectively (although there is one IBM 43 at like ~224bps but I'm not sure why). The BC Long Credit Index technology OAS is sitting at 162bps and the BC LC AA Technology portion is sitting at 98bps. This thing had over $50B in demand for a $17B issuance to get it to 100bps.

I was bad at accurately displaying my point previously, but all credit spreads are unbelievably tight right now, not new information, but I don't see any more demand catalysts right now. Corporate pensions will always be natural buyers of long credit to match their liabilities, but most have already extended duration in their plans and are looking to hedge. Banking deposits have found their way to 0-5 year IG and other shorter-term mandates. The only real demand catalyst I see are Japanese flows, but they seem to be going more towards EM and Global IG or equities rather US credit. All in all, my point is that yes, this deal was priced based on market conditions and have no doubts they'll be able to service their debt, they have enough cash right now to service it over 5x. However, this really looks like a top in the credit. Have you ever seen a debt deal priced like this? I absolutely believe rates will stay range bound but if I had the choice, I'd just take some steps down in quaility to pick up another 80-100bps and just enjoy the income rather than buy a deal like AAPL just had where you are buying a deal at a point where it pays you like you're buying duration while trading like credit. I just don't like that combo.

re: Apple up over 10% and $47 since last week....what do we see first $500 or $400 (Posted on 4/30/13 at 3:29 pm to BennyAndTheInkJets)

There were 6 (I believe that's right) traunches in the deal so it isn't all in 30yr but I get what you're saying. Also, why look at it on OAS basis? There isn't any optionality in the deal. Better to look at spread to swaps or Z spread (0 cpn curve)

This deal was bought by anybody and everybody that invest in corporate bonds and more than likely many that don't.

All bonds are rich right now however and going down the credit curve really doesn't solve that problem either. That's why many insurance companies are looking at different asset classes like commercial mortgages.

re: Apple up over 10% and $47 since last week....what do we see first $500 or $400 (Posted on 4/30/13 at 3:47 pm to bbvdd)

quote:There were 6 (I believe that's right) traunches in the deal so it isn't all in 30yr but I get what you're saying. Also, why look at it on OAS basis? There isn't any optionality in the deal. Better to look at spread to swaps or Z spread (0 cpn curve)

For comparability across corporate bonds. A lot of the longer IBM and MSFT we were discussing are callable.

quote:This deal was bought by anybody and everybody that invest in corporate bonds and more than likely many that don't.

Exactly, which is what worries me. Who's going to buy post issuance? It's somewhat, key word SOMEWHAT, similar to the Facebook IPO. A lot of excitement and everyone rushing in but nobody on the opposite side to take it afterwards.

quote:All bonds are rich right now however and going down the credit curve really doesn't solve that problem either.

Agreed but in the end would you rather just have a 3.5% you know won't default with more duration than a 4.5% you know won't default with less duration?

quote:That's why many insurance companies are looking at different asset classes like commercial mortgages.

Speaking of rich. Everyone has been trying to buy CMBS, especially legacy pre-07 CMBS, hell any non-Agency MBS for a while now. What worries me is the cash bonds are very thinly traded, so you're biting a huge bid/ask at already rich levels where there isn't much upside. It extends the horizon you have to hold simply to make up your spread. You could always go the CMBX route but then that is a different monster in itself that most insurance companies don't want to deal with.

re: Apple up over 10% and $47 since last week....what do we see first $500 or $400 (Posted on 5/3/13 at 12:13 pm to ThaBigFella)

We'll see how it does at the $460 resistance level, if it breaks through and stays through the next stop is $507.

I still stand by my earlier prediction that it flirts with $460 but either doesn't breakout or the breakout isn't confirmed. Honestly, my guess is we'll get a false intraday breakout to ~$461-$462 before it drops back.

re: Apple up over 10% and $47 since last week....what do we see first $500 or $400 (Posted on 5/3/13 at 12:33 pm to BennyAndTheInkJets)

I don't agree that any one strategy works 90% of the time... but I've been playing AAPL as a contrarian fora little less than 2 years now.

When advisors, analysts, and fund managers preached AAPL as the greatest stock in 2012 and the value was spot on, I stayed out. It was the world's greatest stock less than 12mos ago, and it's been hammered year-to-date and now apparently forgot how to innovate.

re: Apple up over 10% and $47 since last week....what do we see first $500 or $400 (Posted on 5/3/13 at 12:47 pm to Cmlsu5618)

im with you CM, they could launch an itoilet and their fanbase will be mass buying. The stores are beyond busy and so what if margins shrunk to 37%.....what are exxon's margins in comparison? Apple is stacking cash at an insane rate, they just created an arbitrage opportunity with their new bonds, and a 2.8% today to sit an wait for their next release is awesome

I think with the cash on hand they may become the next great dividend growth stock, boosting dividends by 10%+ a year